2015-03-25

Growing Opportunities in Chinese Fixed Income

China's government debt-bond swap plan expected to draw investors
China's local government debt-for-bond swap programme, with an initial size of 1 trillion yuan (HK$1.25 trillion) this year, might attract a variety of investors without triggering a US-type quantitative easing.

The Ministry of Finance has asked provincial authorities to convert trillions of yuan of expiring debt into bonds that carry lower yields and longer-term maturities. The move is to improve transparency of liabilities and ease short-term repayment pressures for local governments.

Finance Minister Lou Jiwei told the South China Morning Post last week there was no need to get help from the People's Bank of China on the debt replacement plan. The sales of the bonds would be market-oriented, he said.

China's Shandong province has 1.1 trillion yuan in debt
Shandong, one of China’s largest and most influential provinces, estimates its local government debt to be around about 1.1 trillion yuan, making it the second province to reveal its official debt level to the central government, reports Caijing.

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